MANY OF YOU view me as a cautious observer of the financial world: helping HNWs safeguard their investments, protect their families, wealth, and inheritance – above all, putting my 30 years of experience and expertise on the business table.
Today’s Blog will be different. My wife is Polish. My children are Polish, I live in Poland. I have chosen for once to pin my heart to my sleeve and not bury it in my hard drive.
President Putin’s shameless invasion of Ukraine is generating major shocks in all world markets. But this outrageous assault on millions of blameless people – neighboring Slavs indeed – is so overpowering and scandalous that it will have consequences that we cannot yet fully discern. That is, apart from its age-old foundation: a sound belief in systematic communal murder.
The extensive, almost unbelievably positive response to the refugee crisis that I have observed in the last three weeks, however, is that of the people of Poland. My enquiry today is: why have the Poles in particular acted so urgently and so positively, literally from Day One of the invasion?
Poles Know the Worst and So Rush to Help Ukrainians
Hundreds of thousands of ordinary Poles have flooded the arrival cities and railway stations countrywide to welcome refugees and are now accommodating in their homes over 1.5 million Ukrainian mothers, grandmothers and children. All these innocent people have streamed, confused and uncomprehending, across the border with Ukraine. Polish city names like Przemysl, Kiev and Kharkiv – literally unheard in the West since 1945, even 1918 – daily flash across our screens.
As of March 14, Warsaw had found space for some 300,000 Ukrainians and Krakow now hosts around 100,000. In all, more than half the three million people who have fled over almost three weeks have crossed into Poland. Even the Polish Prime Minister is saying that the country is almost full. Each refugee receives 40 Zloty ($10) per day to help with food.
The Mayor of Warsaw, Rafal Trzaskowski, said to UN officials: “We are preparing to receive up to another million Ukrainians but we cannot manage on our own.”
Similarly neighbors Slovakia, Romania and Moldava are also welcoming Ukrainians in vast numbers. Others are helping too, perhaps for slightly different reasons. In a piquant, nationwide response many Germans, who bear their own bitter remembrances of the Nazi armies’ massacres across Russia and Poland between 1941-45, are keen to offer help wherever they can. This form of intergenerational expiation has spontaneously erupted: as impressive as it is touching.
The British, who worked so decisively with the US on developing sanctions policy, at last have opened their doors.
For a perspective on why the Poles have leapt into action so decisively, one can look at their own historical interactions with Russia. For a deep dive, read my blog on the history of conflict and resilience between the two countries here.
Once again, the ghosts of Lenin and Stalin stalk Eastern Europe
After reciting and reviewing all the painful heroics and horrors explored in events such as these, we must ask: what is their relevance to what is happening in Eastern Europe today?
A month ago the answer was “nothing”. But Europe is, once again, changed forever.
The brutal attack by Russia on Ukraine, as I am sure you will have noted, contains many echoes of the behaviors of Joseph Stalin. The defense of his country was a tenacious act. But it was ruined throughout by the monstrous lies, lie upon lie, told to the world and to his own trusting people. Of course, what was utterly irrelevant four to six weeks ago is now a matter of daily discussion and consideration – particularly for the fortunate people with substantial wealth and concrete assets who have been able to avoid the bombing of Ukraine and the associated world market reverses.
But the warning is now clear. Vladimir Putin’s lies warm our ears each day.
Why do I need a Backup Plan?
In the Age of Putin, you will want and need to have ready your own Backup plan.
“But do I really need a detailed Backup Plan?” is the question I hear increasingly from potential clients.
In response, I often use the “Wildfire” analogy. Why wildfire? Across North America and Australia, these fires annually destroy valuable neighborhoods and lives, in an unexpected and devastating manner. If one happens near your home or estate, you will definitely want to have an escape plan. Moreover, it is only prudent to have comprehensive “fire insurance” for yourself and your family.
The same principle applies to you (and your client’s) family. This is true whether their assets come from traditional investments such as property, securities and high-tech company founding – or such new sources as cryptocurrencies.
Anyone with sufficient assets to protect should all have fully updated Backup Plans to protect themselves and their families from economic, political, or societal upheavals. This is particularly true in uncertain times like those in which we now live.
So what do you need to arrange for your own Backup Plan? I use three headings to define “Tax the Rich” Wildfire issues. They can be summarised as:
One: Fire Prevention
Whether increasing personal security, internationally diversifying assets, or preparing the family for rapid relocation, fire prevention before the fire is at your doorstep is just a prudent precaution.
Two: Fire Insurance for the Plan
Review with expert advisers possible international options for additional residences and even passports. The ultimate choices must meet your family’s needs and obtain support from all family members. Along with personal and business lifestyle requirements, attention must be paid to critical issues such as taxation, physical presence requirements, timing and budget. One area that is often overlooked is the potential for future divorce proceedings not only between adults but also children who may someday marry and divorce.
Three: Fire Escape Plan
The choice of Alternative Residences and Citizenships must be done as part of a Fire Escape Plan. This is a way to move family members and assets from danger to a new safe location.
The actual elements of the Fire Escape Plan require input from experts on both leaving your current location and arriving in your new location. It is worth noting that where the family may be physically located often is NOT where the assets are held or administered. In short to have a successful Fire Escape each step must be planned and executed in the proper sequence.
The Incredible Importance of Second Residence and Citizenships
Citizenship and Residence in a new location is regarded as the essential first step in the protection process for your family’s well-being and wealth.
There will be those that are eligible for lineage or ancestry citizenships. This follows a process which allows you to apply for citizenship based on having family born in a qualifying country. Some countries, such as the UK, limit citizenship by descent to just one generation. However, there are countries in Europe, South America and the Middle East which will bestow citizenship upon those with family trees that go back much further.
If you don’t qualify for lineage citizenships the next route of inquiry would be to pursue citizenship by investment. Where this is offered by a government, legitimate applicants can acquire citizenship as well as residence for a suitable fee.
The passport is the major element.
Never forget that your current passport does not belong to you. Rather it belongs to the Government that issued it. This means it can be taken away. To have a second or parallel family citizenship provides ultimate security in the event of problems.
Russia and Ukraine | Uncertainty for Western Investors – My Conclusion?
Whether UHNW or simply financially comfortable get the best advice from proven experts BEFORE a potential fire ever becomes inescapable. Even if more expensive or difficult initially acquire the Fire Insurance and Fire Escape Plan that gives the best long-term results.
Those of us living securely in the West have been leading largely carefree lives for decades. However – as we’ve seen – the world has changed. When Vladimir Putin launched his unprovoked attack on Ukraine, he threatened the future security of not only Europe but the entire world
The sad facts about nasty surprises are that they actually are nasty and that they do surprise. The tragedy is also that inevitably they are very sad indeed for most of the innocent people involved.